Roth IRA Fees: What Do Companies Charge?

Investors saving for retirement are typically focused on building a portfolio designed to protect and grow their wealth over a long-term time horizon. Two of the main concerns when constructing a long-term retirement portfolio are taxes and costs.

Investors in the United States can reduce the tax burden on their investment portfolio by selecting from several different types of tax-advantaged retirement accounts, such as a Roth IRA. While contributions into a Roth IRA are not tax deductible, they are able to grow tax free. The other big consideration when opening a Roth IRA is cost. Investors can save significant amounts over the long term by choosing a company that charges low fees to open and maintain a Roth IRA.

Below, we look in detail at 14 different companies, in alphabetical order, with which investors can open a Roth IRA. We examine the fees associated with opening and maintaining a Roth IRA at each of them. Readers should note that the fees mentioned below are the base fees charged by the company. There are instances where a company may charge other fees, such as for inactivity, terminating an account, or making certain transactions such as a wire transfer. Also, there may be specific commission fees above the base fee for trading certain types of securities, such as bonds, over-the-counter (OTC) securities, American depositary receipts (ADRs), and options. The fees below are also in addition to the potential loads and management expenses related to investing in a specific mutual fund or exchange-traded fund (ETF).

In many cases, there will be a range of minimum balances and account fees. This is to reflect the fact that most firms offer multiple accounts with different levels of services such as financial advising, each of which comes with additional fees. For most investors, the simplest account type will be sufficient to put together their retirement portfolio. Only a relatively small percentage of investors will need more complicated accounts. Therefore, when comparing companies’ fees, compare the lower numbers listed in ranges, which should best compare the basic accounts that will be sufficient for most investors.

Acorns

• Account Opening Fee: $0
• Maintenance Fees: $3 per month for a personal account and $5 per month for a family account
• Transaction Fees: $0 on ETF trades for accounts with less than $1 million in assets
• Account Minimum (fee for going under the minimum): $0 (N/A)

Acorns Grow Inc. is a financial technology (fintech) company that offers a micro-investing platform, a type of investing platform that helps people to save small amounts of money on a regular basis. The platform is designed to regularly invest users’ spare change in a managed portfolio composed of a number of ETFs, which are selected by Acorns from a list of about 22 ETFs. Currently, users do not have the option to invest in individual stocks, bonds, cryptocurrencies, or other securities.

Acorns also offer certain banking services, including a checking account and debit card.

Ally

• Account Opening Fee: $0
• Maintenance Fees: $0
• Transaction Fees: $0 on eligible U.S.-listed stocks, ETFs, and options (+$0.50 per contract fee for options)
• Account Minimum (fee for going under the minimum): $0 for a self-directed account and $100 for a robo-portfolio account (account may be subject to closure after falling below minimum)

Ally Financial Inc. (ALLY) is a digital financial services company. Through its subsidiaries, the company offers a range of banking, insurance, and other financial products and services.

Ally operates a digital investment platform that provides investors with the ability to trade stocks, bonds, ETFs, mutual funds, options, and other securities through a self-directed account. Ally offers thousands of ETFs and mutual funds in which to invest. Investors also have the option to build a portfolio managed and monitored by a robo-advisor.

Betterment

• Account Opening Fee: $0
• Maintenance Fees: 0.25%–0.40% annually of the average daily balance of assets under management (assessed on a monthly basis)
• Transaction Fees: $0 for ETF trades
• Account Minimum (fee for going under minimum): $0 for Digital investing plan and $100,000 for Premium investing plan (consult company for below-minimum fee)

Betterment is a fintech company with more than $33 billion in assets under management (AUM) as of Dec. 31, 2021. The company offers a robo-advisory platform to simplify investment and portfolio management decisions for its users. The platform’s automated technology constructs a portfolio of low-cost, diversified ETFs based on users’ unique financial goals.

Betterment’s portfolios are constructed from a list of about 29 different ETFs from a range of categories, such as U.S. total stock market, U.S. value stocks, international developed market stocks, U.S. high-quality bonds, and international emerging market bonds.

E*TRADE

• Account Opening Fee: $0
• Maintenance Fees: 0%–0.30% annual advisory fee if rolled into a core portfolio account
• Transaction Fees: $0 for online U.S.-listed stock, ETF, and option trades (+$0.50–$0.65 per contract fee for options)
• Account Minimum (fee for going under minimum): $0–$500 for core portfolio (if account falls below minimum, it is converted to a non-managed account)

E*TRADE Financial Corp., which was acquired by multinational financial services firm Morgan Stanley in October 2020, is a financial services company that operates an online trading platform. The platform allows investors to open a brokerage account and trade stocks, options, ETFs, bonds, mutual funds, and other securities at a low cost. Investors also have access to portfolios managed by a team of experts and automated technology.

E*TRADE offers a select group of widely traded ETFs and thousands of mutual funds in which to invest.

Edward Jones

• Account Opening Fee: $0
• Maintenance Fees: $40 per year for first Roth IRA ($20 per year for each additional Roth IRA)
• Transaction Fees: Up to 2.5% of principal amount or $50 minimum commission on trades for stocks, ETFs, master limited partnerships, real estate investment trusts (REITs), or preferred stocks in addition to a $4.95 transaction fee per trade for “most buy and sell trades in your account.”
• Account Minimum: $0–$500,000, depending on account type (consult company for below-minimum fee)

Edward Jones, which is the primary operating subsidiary of The Jones Financial Companies LLLP, operates a retail broker-dealer business. Its main focus is serving individual investors in the U.S. and Canada. The company serves more than 7 million investors, providing them with advisory and other account services.

Edward Jones has approximately $1.6 trillion in client assets under care. The company offers a range of investment products to its clients, including mutual funds and ETFs.

Fidelity

• Account Opening Fee: $0
• Maintenance Fees: 0%–0.50% annual advisory fee, depending on account type and balance
• Transaction Fees: $0 for online U.S.-listed stock, ETF, and option trades (+$0.65 per contract fee for option trades)
• Account Minimum (fee for going under minimum): $0–$25,000 (consult company for below-minimum fee)

Fidelity Investments, which is owned by FMR LLC, is a financial services company that provides wealth management, brokerage services, retirement planning, and more. The company serves approximately 40 million individual investors and has $11.8 trillion in assets under administration (AUA) as of Dec. 31, 2021.

The company provides access to one-on-one coaching with professional financial advisors, typical of a full-service broker. But it also offers discount brokerage services, including commission-free stock, ETF, and options trading.

Fidelity offers a wide range of ETFs and thousands of mutual funds in which to invest.

Interactive Brokers

• Account Opening Fee: $0
• Maintenance Fees: $0
• Transaction Fees: $0 on U.S.-listed stock and ETF trades (for U.S. residents)
• Account Minimum (fee for going under minimum): $0 (N/A)

Interactive Brokers Group Inc. (IBKR) operates as an automated electronic broker. It acts as a custodian and provides other account services for hedge funds, mutual funds, ETFs, registered investment advisors, proprietary trading groups, introducing brokers, and individual investors.

The company provides a range of account options to meet the specific needs of individual investors. Investors have access to a suite of trading platforms and can trade U.S. stocks and ETFs commission free.

Interactive Brokers offers hundreds of ETFs and thousands of mutual funds in which to invest.

M1 Finance

• Account Opening Fee: $0
• Maintenance Fees: $0
• Transaction Fees: $0 for ETF trades
• Account Minimum (fee for going under minimum): $500 initial minimum deposit (accounts with $20 or less are zeroed out after more than 90 days of inactivity)

M1 Finance, a subsidiary of M1 Holdings Inc., is a fintech company that offers an online platform that provides individuals with a variety of banking and financial services. The platform offers automated, commission-free investing, loans, a checking account, and a credit card.

Investors can build their own portfolio or select a pre-built portfolio that caters to their particular financial goals or investment style. M1’s proprietary trading system automates all trading activity once a portfolio is constructed or chosen. Investors can select from more than 6,000 stocks and ETFs to include in their portfolios, but M1 does not currently offer mutual funds, options, or cryptocurrencies in which to invest.

Merrill Edge

• Account Opening Fee: $0
• Maintenance Fees: 0%–0.85% annual fee based on assets held in the account
• Transaction Fees: $0 for online stock, ETF, and option trades (+$0.65 per contract fee)
• Account Minimum (fee for going under minimum): $0–$20,000 (consult company for below-minimum fee)

Merrill Edge, which is owned by Bank of America Corp., operates an online investment and wealth management platform. Investors are provided access to a variety of account options, including: a self-directed account with commission-free trading of stocks, ETFs, and options; a guided investment account with professional portfolio construction and management; and a guided investment account with the addition of a financial advisor.

Merrill Edge offers investors access to a wide range of ETFs and thousands of mutual funds, many of which have no fees or commissions.

Schwab

• Account Opening Fee: $0
• Maintenance Fees: $0
• Transaction Fees: $0 for online stock, ETFs, options, and select Schwab mutual funds (+$0.65 per contract fee for option trades)
• Account Minimum (fee for going under minimum): $0 (N/A)

The Charles Schwab Corp. (SCHW) is a financial services company with approximately $7.8 trillion in client assets as of Jan. 31, 2022. Through its subsidiaries, the company offers wealth and asset management, securities brokerage, banking, custody, and advisory services.

Schwab offers investors a wide range of different types of investment accounts, all of which are free to open and maintain. Investors can also choose from a variety of investment management options offered at a range of different costs, depending on the option selected.

The company provides investors with access to thousands of ETFs and mutual funds with which to construct a portfolio.

SoFi

• Account Opening Fee: $0
• Maintenance Fees: $0
• Transaction Fees: $0 on stock and ETF trades
• Account Minimum (fee for going under minimum): $0 (N/A)

SoFi Technologies Inc. (SOFI) is a fintech company that operates a digital platform offering a range of financial products and services, including loans, savings and checking accounts, and credit cards. Through its SoFi Wealth subsidiary, the company has more than $523 million in AUM.

SoFi offers a robo-advisory platform that provides automated, algorithm-driven financial planning with little to no human supervision. The robo-advisor manages customer portfolios composed of stocks, bonds, and ETFs. SoFi does not offer mutual funds.

Investors have access to six of the company’s proprietary ETFs, each of which is focused on a particular theme such as large caps, the gig economy, or the top stocks traded on the company’s platform.

TD Ameritrade

• Account Opening Fee: $0
• Maintenance Fees: $0
• Transaction Fees: $0 for online U.S.-listed stock, ETF, mutual fund, and option trades (+$0.65 per contract fee for option trades)
• Account Minimum (fee for going under minimum): $0 (N/A)

TD Ameritrade, which was acquired by Schwab in 2020, provides a full suite of brokerage products and services. The company has more than 11 million clients with accounts totaling over $1 trillion in assets.

TD Ameritrade provides an online trading platform with a variety of investment options and trading tools for both beginner investors and more experienced traders. The company also offers financial research and educational material to help investors build a portfolio suited to their specific financial goals and risk tolerance.

TD Ameritrade provides investors with access to thousands of mutual funds and ETFs.

Vanguard

• Account Opening Fee: $0
• Maintenance Fees: $0–$20 ($20 fee is waived if you choose to have your account information delivered electronically instead of by mail)
• Transaction Fees: $0 for stocks, ETFs, and Vanguard mutual funds
• Account Minimum (fee for going under minimum): $0, but $20 fee is waived for accounts over $10,000

The Vanguard Group Inc., known simply as Vanguard, is one of the world’s largest investment management companies, with about $8.1 trillion in AUM globally as of Jan. 31, 2022. The company offers a broad range of investment options, advice, retirement services, and more.

Vanguard offers a full suite of brokerage services, including professionally managed portfolios and advisory services. It also offers robo-advisory services and provides a trading platform with commission-free stock, ETF, and Vanguard mutual fund trading.

Investors can select from hundreds of Vanguard’s proprietary mutual funds and ETFs.

Wealthfront

• Account Opening Fee: $0
• Maintenance Fees: 0.25% annually based on account assets
• Transaction Fees: $0 for ETF trades
• Account Minimum (fee for going under minimum): $500 minimum initial deposit (consult company for below-minimum fee)

Wealthfront Corp. is a financial services company with more than $27 billion in AUM. The company offers wealth management and investment advisory services. It operates a robo-advisor that uses algorithms to provide clients with customized investment management, financial planning, and a range of its brokerage products and services.

Wealthfront’s portfolios are constructed by selecting from a broad range of ETFs. Investors can further customize their portfolios by adding or removing investments or by changing the allocations of existing investments. The company does not hold mutual funds in its portfolios.

On Jan. 26, 2022, Swiss multinational investment bank UBS Group AG agreed to acquire Wealthfront in an all-cash transaction valued at $1.4 billion. The transaction is expected to close sometime during the second half of 2022.